The study provides a new perspective on SME marketing strategies in the B2B context. Using a resource-based view of the firm, the study develops a structural model linking marketing capabilities and marketing performance. A study of 367 SME Australian firms reveals that two key marketing capabilities, namely branding and innovation, have major performance outcomes in the SME B2B context. This is the first SME study to evaluate concurrently the contribution of innovation and branding marketing capabilities, with innovation capability the strongest determinant of SME performance. The study also finds market orientation and management capability act as enabling mechanisms for building marketing capabilities. Disaggregation tests indicate that the same findings apply to three size categories denoting micro firms (less than 20 staff), small firms (20–99 staff) and medium-sized firms (100–499 staff).
Using a resource-based theory of the firm, the current study explores which marketing capabilities impact SME performance. Current approaches usually focus on a single marketing capability, often innovation (O'Dwyer, Gilmore, & Carson, 2009) or branding (Abimbola & Vallaster, 2007) as potential key drivers of SME performance. While such approaches are useful and indicate that each driver is important, they do not establish a pecking order of importance, nor do they indicate a clear mechanism for improving performance. The current study provides a more comprehensive approach to assessing the relative contribution of two major, higher-level marketing capabilities, innovation and branding, to marketing performance.
One objective of the current paper is to progress the literature in terms of assessing the contribution of higher-level marketing capabilities to performance. In particular, it is unclear which of the higher-order capabilities are most important to performance. A second objective is to model such assessments in the context of B2B SME firms. Very little is known about the relative contribution of different higher-order marketing capabilities in the SME context. A third objective is to examine the relative contribution of marketing support capabilities to each of the higher-level marketing capabilities. Evaluating such relative contributions clarifies the mechanisms by which marketing capabilities are created and managed. A fourth objective is a specific variation of the third, namely in terms of explaining innovation capability, to test whether firm size is a moderator rather than an antecedent to the innovation process ( Harmancioglu, Droge, & Calantone, 2009).
To address these objectives, we first provide a broad theoretical context. Then we conceptualize directional relationships between particular higher-order marketing capabilities (innovation and branding) and marketing performance. Next, we conceptualize the relationship between marketing support capabilities (market orientation and management) and each of the marketing capabilities. The structural model is developed by conceptualizing the relationship from marketing performance to financial performance. The total structural model is estimated using structural equation modeling (AMOS software) with a sample of 367 Australian SMEs in the B2B sector. Additional tests use multiple regression analysis at a disaggregated level, with three different firm size levels. In particular, the disaggregation method tests whether firm size moderates marketing capabilities.
Firm size is an important dimension of the study. The upper size boundary for a small and medium-sized firm lacks consensus, but the current study adopts a common choice, namely 499 (Berthon et al., 2008, Hooley et al., 2005, Motwani et al., 1999 and Pfirrmann, 1995). The range of 1–499 covers a potentially wide diversity of resource endowments and behaviors, leading many researchers to distinguish between small (defined here as less than 100 employees), and medium-sized (100–499) firms. Selection of the 100 cutoff-level is commonly used ( Bonaccorsi, 1992, Coviello et al., 2000 and Motwani et al., 1999). Within the small category, a further division between small (defined as 20–99 in our study) and very small or micro (defined as less than 20 employees in our study), allows for further potential size-based differences in behavior. The aim is to make the micro size cutoff as small as practical, noting a range of cutoff selections in the literature, 20 ( Bonaccorsi, 1992, Cobbenhagen, 2000, Hooley et al., 2005 and Lybaert, 1998), 25 ( Berthon et al., 2008) and 50 ( Motwani et al., 1999).
In the first instance, the study provides insight into how micro, small and medium-sized firms in the B2B sector undertake marketing strategies. The study uses a resource-based view of the firm framework, which provides robust structural equation modeling results. In a pioneering contribution for the SME B2B sector, the study highlights the major contribution of two key marketing capabilities to explaining marketing performance. The two key marketing capabilities are branding and innovation. No previous single SME B2B study has indicated the concurrent, combined importance of these two marketing capabilities.
